Retailers leverage planograms (corporate’s instructions on how to set up shelves, facings, categories, view heights, etc.) to improve customer satisfaction, vendor terms and conditions, and on-shelf availability. Unfortunately, many organizations issue these critical tools and simply assume that stores will execute them properly.
Planogram compliance should never be assumed. There is always a risk of a disconnect between different intermediaries in the merchandising team, for both e-commerce and brick-and-mortar stores, which can impact communication and cause misexecution. Some disconnects are understandable because of differences in store space, locations and layouts. To avoid the missed sales, out-of-stocks and customer dissatisfaction caused by realogram (the actual state of the shelf)-to-planogram misalignment, retailers must invest in advanced technologies that can ensure compliance and proper execution.
Differentiating Planograms Vs. Realograms
Countless factors go into deciding how to set up a shelf. With strategy being driven at the corporate level, it’s common practice for retailers to useplanogramsto execute their in-store plans. A planogram is a visual representation of the final, exact product placement and layout of a shelf. A retailer’s merchandising or marketing team creates the planogram, factoring in aesthetics, product placement and flows, merchandising principles, sales performance, number of facings and eyesight level. Additionally, terms and conditions/agreements with CPG vendors, specific clienteling needs or even the retailer’s culture can influence a planogram. Put simply, a planogram is what a shelfshouldlook like, per corporate’s objectives.
In contrast, a realogram is a realistic depiction of a specific shelf at a given store and a given time. Essentially, it is how the shelfactuallylooks and “behaves” in terms of product assortment and layout. By checking the realogram against the planogram, retailers can verify that their stores have properly executed the planogram and are in compliance, with all items displayed as expected. The drivers for a delta (i.e., difference) between a planogram and realogram are countless, but some examples include knowledge gaps around new “resets,” uncommunicated changes made at headquarters, space constraints due to limited shelf real estate, clienteling activities and others.
Creating P/R Alignment
Ensuring planograms and realograms are aligned is critical; otherwise, the consequences can be far more severe than just a sloppy-looking display.
For one, planograms are set up to maximize sales. The items may be arranged based on visual appeal, popularity, ongoing promotions and so on. Any deviation from the planogram can make it difficult for consumers to find the items they need. This results in a poor experience and may prompt them to leave the store without making a purchase. Loyal customers want to know exactly where to find their favorite products.
In addition, the highest-priority factor in creating a planogram is product placement, or when CPG manufacturers pay for ideal product locations within a store. By far the most coveted (and expensive) area is the eye-level shelf, where customers will likely look first. Some manufacturers will even buy out an entire section of an aisle to draw emphasis toitsproducts and away from competitors’. This practice costs CPG companies billions of dollars per year, meaning that any deviation from the planogram could result in financial penalties for a retailer.
Even when a shelf has not been bought out by a manufacturer, planogram compliance is still key. This is because retailers can fill any available eye-level shelves with their own highest-margin items to maximize sales — and that information will be in the planogram. In an age where margins are razor-thin, it’s critical for retailers not to miss any of these invaluable opportunities. If the planogram is not followed, margin erosion could result.
Putting Alignment Tech To Action
So how can retailers get started implementing realogram-to-planogram alignment solutions? It starts with assessing the need. That could involve checking product records, taking store walks or reorganizing shelves — all actions that can reveal potential alignment issues. Those findings can determine a need for realogram-to-planogram alignment technology, the first step to the implementation process. Retailers can also prioritize categories based on shifts in business or based on top categories across all stores.
The next step is to match a solution to available resources. If there’s store labor to spare, employees can use handheld mobile computers to photograph shelves throughout the day. These photos are sent either straight to a manager or to the cloud. For instance, an employee takes a photo of their store’s beauty aisle. The grocery manager later compares the photo (realogram) to the planogram and discovers that two brands of bar soap (Acme Bath and the store’s brand) are misplaced. He directs an employee to move the items to their proper places.
If store labor is tight but budgetary room for technological innovation exists, sophisticated robots combined with digital imaging cameras are a cost-effective option to monitor inventory, planogram execution and pricing accuracy. These cameras, installed on the moving robots, can identify product misplacement and on-shelf availability needs.
If your aisles are too narrow, you can also install shelf cameras with a battery lasting several months, which can be installed with little to no complexity. The camera optics for both are augmented with computer-vision applications that can be programmed with official planograms and recognize when specific products are out of place, running low or missing (“holes”). This solution is a more automated way to keep an accurate stock of product availability and placement accuracy.
Retailers whose stores have wider aisles can leverage mobile camera-equipped robots, preferably guided by a prescriptive application, to identify necessary improvements. The robots can check specific areas for promotional execution, on-shelf concerns and/or planogram compliance and later direct employees to correct any issues. Retailers can further use advanced analytics to translate any findings into simple corrective actions for employees to follow.
In reality, few retailers have enough spare labor and capital to develop, engineer and build this tech completely in-house. Thus, most will benefit from leveraging a reliable partner who can provide advanced realogram-to-planogram alignment tools on the market. The capabilities of their solutions can maximize sales, minimize out-of-stocks, increase freshness and improve the customer experience.